Navigating the Surge in Car Insurance Premiums: Tips to Save Money
By Emily Mee, News Reporter
If you’ve been hit by a dramatic increase in your insurance premium over the past year or two, join the club. Car insurance premiums have skyrocketed—by as much as 58% in just 12 months, according to data from Confused.com. The average policy now costs a staggering £995, up from £366 the year before. This sharp rise has left many drivers feeling frustrated and confused about how insurance companies determine their pricing.
Understanding the Factors Behind Rising Premiums
Insurers have cited several reasons for the increase in premiums, including heightened labor and repair costs, increased car usage post-COVID, a shortage of microchips, higher second-hand car values, and the ongoing conflict in Ukraine. However, the intricacies of how insurance companies calculate these costs remain largely opaque.
"It’s so complex and big, no one really understands how it works unless you’re in the industry," says consumer expert Scott Dixon, also known as The Complaints Resolver. This complexity can leave consumers feeling powerless, but there are strategies to help mitigate the financial burden.
Tips for Reducing Your Car Insurance Premium
While the pricing structure may be convoluted, there are several actionable steps you can take to lower your insurance costs. Here are some expert tips from Scott Dixon that even seasoned negotiators may not have considered.
1. Perfect the Art of the Haggle
Your first step should be to negotiate with your current insurance provider. This is often less hassle than switching companies and allows you to leverage your loyalty. Dixon advises coming prepared with quotes from other insurers and never accepting the first offer. A simple, friendly inquiry like, "Is that the best you can do?" can go a long way.
Be aware that you might be placed on hold while they "speak to a manager," a common tactic to buy time before offering a better deal. Additionally, don’t forget to ask them to waive the annoying £25 admin fee for renewing your policy, as Dixon points out, "It doesn’t cost £25 to push a button."
2. Use Cashback Sites
Consider using cashback websites like Quidco or TopCashBack, which can offer cashback on your insurance premiums. Scott shares that he saved £36 using this method, while our cost of living specialist, Megan Harwood-Baynes, saved £40. It’s a simple way to get a little extra back in your pocket.
3. Avoid Auto-Renewal
It’s easy to overlook the reminder email for your policy renewal, but this can cost you. Set a reminder to start checking for renewal quotes 21 days before your insurance expires. This timeframe is often when you can secure the best price.
4. Pay Annually Instead of Monthly
Paying your car insurance annually can save you up to 30% compared to monthly payments. If a lump sum isn’t feasible, consider using a 0% credit card to pay the annual premium and then set up a direct debit to manage monthly repayments.
5. Secure Your Vehicle
If you’ve made modifications to your car to enhance its security—like installing an immobilizer or a steering lock—inform your insurer. You may qualify for a premium reduction. Additionally, fitting a dashcam can also lead to discounts.
6. Adjust Your Job Title
Certain professions are associated with higher premiums. While honesty is crucial when dealing with insurers, you might consider slightly tweaking your job title to reflect a less risky occupation. Just ensure that any changes remain truthful to avoid policy invalidation.
7. Bundle Insurance Policies
Many insurers offer discounts for bundling your car insurance with home insurance. This can lead to significant savings, so it’s worth exploring this option.
8. Limit Your Mileage
Keeping your mileage low can categorize you as a lower risk, potentially leading to reduced premiums. However, be truthful about your mileage, as this can be verified through the UK government’s MOT history check.
9. Consider a Black Box Policy
Installing a telematics device to monitor your driving can lead to lower premiums, especially if you demonstrate safe driving habits. However, be cautious; erratic driving or late-night trips could increase your policy costs.
10. Downgrade Your Vehicle
While it may not be the most appealing option, opting for a less expensive car with a smaller engine can dramatically cut your insurance costs.
11. Evaluate Optional Extras
Many insurers are adopting a "Ryanair-style pricing" model, adding extra costs to your initial quote. Review any optional extras carefully; you may find that some are unnecessary. For instance, some car dealerships offer free breakdown cover with annual services, which could save you from duplicating costs.
12. Opt for a Higher Excess
Choosing a higher excess can lower your insurance premium. While this means you’ll pay more out-of-pocket in the event of a claim, it can significantly reduce your overall costs.
Conclusion
The surge in car insurance premiums can be daunting, but by employing these strategies, you can take control of your insurance costs. Whether it’s haggling with your current provider, exploring cashback options, or making informed choices about your vehicle and coverage, there are numerous ways to save. Stay proactive, informed, and don’t hesitate to negotiate—your wallet will thank you.